On July 30, 2002 the Sarbanes-Oxley Act of 2002 was signed by President Bush. The act showed the federal regulation of public company corporate governance and reporting obligations. It also tightened up the accountability standards for directors and offices, auditors, securities analysts and legal counsel. The Sarbanes Oxley acts add more jail time for anyone who lies on any of their accounting procedure. In using Sarbanes-Oxley there is a longer statute of limitations on accounting procedures that include fraud. It used to be that the maximum number of years to report a crime was two years; it has now been extended to five. .
The bill which was passed unanimously in the Senate was also passed by the house with a vote of 423-3. It was presented by Representative Paul Sarbanes whom wanted to see tougher accounting rules in affect. With the act being in effect there is now a five-member accounting oversight body to investigate and punish accounting firms, of publicly held companies. It also got rid of the peer review process and replace them with federal accounting. If a CEO or CFO is caught lying on their financial reports they can be sentenced with a maximum twenty year jail term or a five million dollar five. It also prevents a CEO from selling stock during "black out periods" (Hecht) .
Prior to the Sarbanes-Oxley Act of 2002 being signed there were a number of accounting fraud every year. Two of the more high profile cases include both members from the Xerox Corp. and also Rite-Aid. The employees from Xerox were charged in the late 1990's for "inflating company revenues by billions of dollars"( Jackson 52). The six employees whom were being charged by the SEC have since settled. Together they have paid a fine of nearly thirty million dollars. .
One of the Xerox company employees whom was charged was Paul A. Allaire. He was the chief executive officer and chairman of the company. Although he never admitted or denied the charges against him, he did agree to "never violate the antifraud, reporting, books-and-records, and internal controls provisions of the federal securities laws" ( Jackson 52).